About Me

Tuesday, October 23, 2012

This is my letter to two Senators which I faxed to their respective offices late afternoon today.
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23 October 2012

Hon. Pia S.
Cayetano

Chairperson

Committee on Youth, Women and Family Relations

Hon. Francis
N. Pangilinan

Chairperson

Committee on Social Justice, Welfare and Rural
Development

Senate of the Philippines

Pasay City

Dear Senators Cayetano and Pangilinan,

While the State has the
obligation to protect the citizens’ right to life, private property and
liberty, it may have no right to force and coerce private enterprises to give
mandatory discounts to their consumers if these companies are already paying
the required taxes and complying with various health and regulatory
requirements.

The provisions of two Senate
Bills amending RA 8972 or the “Solo Parents Welfare Act of 2000” seem to go
along this practice. To give additional benefits to solo parents, SB No. 2563
by Sen. Manny Villar provides these mandatory discounts:

(A) TWENTY (20%) PERCENT DISCOUNT ON
ALL PURCHASES OF MILK OR FORMULA PRODUCTS AS WELL AS DIAPERS AND OTHER
NECESSARY INFANT ITEMS;

(B) TWENTY (20%) PERCENT DISCOUNT ON INFANT MEDICINES
AND SUPPLEMENTS. INFANT SHALL REFER TO CHILDREN AGED 0- TO 4 YEARS.

And SB No. 1439 by Sen. Loren Legarda provides the
following additional benefits to solo parents:

(1) TEN PERCENT (10%) DISCOUNT FROM ALL PURCHASES OF
CLOTHING AND CLOTHING MATERIALS FOR THE CHILD MADE WITHIN A PERIOD OF UP TO TWO
(2) YEARS FROM THE CHILD'S BIRTH;

(2) FIFTEEN PERCENT (15%) DISCOUNT FROM ALL PURCHASES
OF BABY'S MILK, FOOD AND FOOD SUPPLEMENTS MADE WITHIN A PERIOD OF TWO (2) YEARS
FROM THE CHILD'S BIRTH;

(3) FIFTEEN PERCENT (15%) DISCOUNT FROM ALL PURCHASES
OF MEDICINES AND OTHER MEDICAL SUPPLEMENTS/SUPPLIES FOR THE CHILD MADE WITHIN A
PERIOD OF FIVE (5) YEARS FROM THE CHILD'S BIRTH; AND

There are serious flaws in these two bills forcing
companies to give mandatory discounts. Among them:

1. They assume that all solo parents in the country
are poor or financially distressed and hence, the need to give them mandatory
discounts for their young children’s needs. This is not true.Some solo parents are rich themselves or have
rich family members who can give them variousassistance in cash or in kind.

2. They assume that all shops, manufacturers and
traders that produce or sell these goods are rich or financially stable and
hence, can afford to give such discounts without adversely affecting their
financial conditions. Again this is not true. While some companies are
financially stable, others are not or may even be in the brink of bankruptcy
due to various financial, economic and social challenges here and abroad.

3. They assume that even financially unstable shops,
manufacturers and importers of these products will continue selling these
goods. This is wrong. Oneresult of the
implementation of RA 9994 or the “Expanded Senior Citizens Act of 2010” where
senior citizens are given mandatory discount of 20 percent plus 12 percent VAT
free or 32 percent effective discount on medicines, not tax creditable, is that
small drugstores that cannot afford to keep selling medicines at a loss have
stopped selling essential medicines to senior citizens. Those living in small
and rural municipalities have to travel to bigger cities that are far away so
they can buy at Mercury or other large chain pharmacies.

This proves once again that Newton’s third law of
motion, “For every action, there is an equal opposite reaction”, can also apply
in economics. This can be aptly restated as “For every government intervention
to force welfare, there is an equal opposite reaction that results in
diswelfare.”

Sen. Legarda’s bill has one consolation, it provides
that:

COMPANIES OR BUSINESSES FROM WHOM DISCOUNTED PURCHASES
ARE MADE AS PER THE IMMEDIATELY FOREGOING SECTION SHALL BE ENTITLED TO CLAIM
THE SAID DISCOUNTS AS PART OF THEIR BUSINESS EXPENSE, PROVIDED THAT, THEY
MAINTAIN DETAILED AND SEPARATE RECORDS OF SAID PURCHASES."

While this may look good,
there could be some technicalities involved that will prevent the affected
enterprises from claiming such deductions early enough.

Based on the above
considerations, it would appear that these two Senate Bills are unnecessary and
hence, they should not be entertained by the Committees where they are referred
to.

There are alternatives to
help poor parents, solo or not. These include the conditional cash transfer
(CCT), the universal healthcare (UHC), and relatedprograms for the poor by the government.
Under the CCT or 4Ps program, the government is giving money to poor parents so
they can buy essential items for their families. Under the UHC, the Department
of Health and some rich local governments shoulder the annual PhilHealth
contribution of poor households. So that not only babies and toddlers, but even
adult members of the family like the parents and grandparents are covered by government
healthcare.